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What Marketers Should Know About Advertising to Gen Z

More and more consumers are cutting the cord on cable, but some—like Gen Z—are tech-savvy, digital natives who have avoided cords their entire lives (or close to it). They’re called “cord-nevers,” and they’re an important demographic whose spending power is growing as they enter adulthood and earn higher incomes.

According to most recent estimates, Gen Z consumers (typically defined as those born between 1997 and 2012) have $360 billion in discretionary income in the U.S. and $450 billion worldwide. With lower housing and dependent-family costs than older generations, they are also more likely to put their extra money toward personal spending. And their behavior is only a hint at what’s to come. By 2030, Gen Z’s share of total retail spending is expected to reach 48%. That’s some serious buying power.

All of these factors make Gen Z a prime target audience for many brands (and the marketers who promote them). But before you can sell to Gen Z, you have to understand who they are and where to find them. This article covers both.

Explore this article:

Gen Z spending habits
How Gen Z makes purchase decisions
Where marketers can reach Gen Z
Takeaways for marketers

Gen Z typically has fewer financial responsibilities and is more likely to spend on personal expenses than other generations.

According to a recent study by PYMNTS, Gen Z consumers are less likely to face emergency expenses than older consumers. They are also more likely to receive help paying their bills, and many find themselves in a living situation (e.g., their parents’ homes) where they don’t pay rent. And when they do pay for housing, it accounts for only 20% of their income, compared to 30% among Gen X.

10% Less

Gen Z consumers are less likely to face emergency expenses than older generations.

35% Rent-Free

Many Gen Z consumers are in a living situation where they don’t pay rent.

Source: New Reality Check: The Paycheck-to-Paycheck Report, PYMNTS

This housing divide may be due to a willingness or need among Gen Z consumers to live (and split costs) with one or more roommates or to opt for more economical housing. But whatever the cause, the implications are clear: With less money tied up in responsibilities, Gen Z consumers feel more freedom to spend on nonessentials like recreation, travel, technology, leisure and entertainment, clothing, and accessories—even if it means putting themselves in a more precarious financial situation. In fact:

“PYMNTS found that Gen Z consumers are slightly more likely than the U.S. average to be living paycheck to paycheck (59% compared to 58%). They are also the most likely of all generations to consider splurging on nonessentials (33.7%) to be the reason.”

Despite this, Gen Z is more optimistic about their personal financial future than they have been since 2020, and 25% of Gen Z plans to shop more in 2024, despite also believing that retail prices will continue to increase.

Decisions, Decisions

Just because Gen Z consumers spend more of their money on nonessentials doesn’t mean they spend indiscriminately. On the contrary, Gen Z makes thoughtful buying decisions.

“[Gen Zers] are really savvy at going between their phone, their apps, the website, the store, and back again and again to figure out, ‘What do I want? What do I need? When am I going to get it?’ and being really intentional about that shopping.”

– Tamara Charm (Partner, McKinsey & Company) as quoted by the BBC

Here’s a look at what Gen Z consumers want from brands:

Quality

Affordability matters to Gen Z, but when push comes to shove, they value the quality of the goods they purchase above all. In one study, 74% of Gen Z respondents called quality “very or extremely important.” In another, 64% cited quality as the most important buying decision factor, beating out price. According to holiday shopping research by McKinsey, they are also the only generation that reported valuing quality above price in a 2023 holiday shopping survey.

Sustainability

Many Gen Zers balance a desire for high-quality products with their concern for the environment. In addition to taking action themselves, a Deloitte study found that 79% of Gen Z consumers agree that businesses “could and should do more to enable consumers to make more sustainable purchasing decisions.”

The same study found that 30% of Gen Zers “conduct research on a company’s environmental impact and policies before buying products or services from them,” and 64% “are willing to pay more to purchase environmentally sustainable products or services.” In addition, 25% are willing to drop a brand if they discover the brand has problematic practices from a sustainability perspective.

Brand Authenticity

In addition to sustainability, you may have heard that Gen Z is calling on brands to be “authentic.” You may have also thought, what in the world does it mean to be authentic?

By and large, it refers to Gen Z’s desire for brands to have a point of view and to be “real”—that is, to act less like a corporation and more like a living, breathing entity that actually cares about something. In other words, they seek out brands with a story and values they relate to like diversity, inclusivity, and social responsibility.

Of course, Gen Zers aren’t a monolith. They don’t all care about the same things, and sometimes, the things they care about are at odds. For brands, it can feel risky to take a stance when it could mean alienating some consumers. But in an age when emotional connection is paramount to brand loyalty, not standing for anything may be even riskier.

Convenience and Experience

Of course, branding alone won’t close a sale. Once a Gen Z consumer reaches the bottom of the marketing funnel, a slew of factors can make or break their buying decision. They’re likely to price shop, for example, and have a tendency to hold out for a promotion or deal. They also value free and fast shipping and flexible return policies—like the option to bring items they order online back to a brick-and-mortar store. Speaking of brick-and-mortar, if a product is above $50, many Gen Z want to see it in person before they buy.

Be the Brand of Their Streams

Knowing what Gen Z cares about only gets a brand so far, though. You also have to know where to reach them.

It probably comes as no shock that Gen Z is all over video content-heavy social media platforms like TikTok and Snapchat, as well as user-generated content channels like YouTube. But what may be more surprising is how they consume television. And if you couldn’t already guess by the moniker “cord-nevers,” it’s not on cable.

That’s not to say Gen Zers never watch linear TV. Many of them live with their parents, after all, and their parents may still have a cable subscription. But Gen Z does spend way more time— 300% more time, to be precise —streaming via a connected TV or smartphone.

Of course, within the streaming category, they have options. And despite Gen Zers’ general propensity to spend on nonessentials, an increasing number are concerned about costs.

According to The Stream 2024: Streaming Insights for Marketers, Gen Z largely believes they are overspending on streaming services, and 1 in 4 plans to cut at least one paid subscription in the future. The most likely catalyst? Price hikes. Among Gen Zers, 83% say they would end a streaming subscription if the price increased. And with subscription video on demand services (SVODs) struggling to turn a profit, additional price increases are likely on the horizon.

As a result, more consumers are tuning in to free and low-cost advertising-based video on demand (AVOD) platforms like Tubi, which not only beat subscription channels in terms of affordability, but also offer a wide array of content options that cater to different tastes.

Gen Z’s Streaming Habits

Now that you know where to find Gen Z consumers, it helps to know what they’re doing once they get there.

Here’s what The Stream 2024 found about the streaming habits of Gen Z:

Streaming Time Is Quality Time
Across age groups, consumers love watching streaming content with other people as a form of quality time—but a majority of Gen Zers (54%) prefer watching content with people outside of their household.

30%

Stream socially in person while visiting with friends

21%

Text loved ones while streaming the same content from different locations

13%

Chat with others on social media as they stream

They Like What Their Friends Like
Gen Z streaming choices are often driven by what’s trending, either among their friends or on social media. Nearly half (48%) of Gen Zers and Millennials admit they will watch a trendy TV show—even if they don’t love it—just to keep up with what their loved ones are talking about, and 45% of Gen Z choose what to watch based on the content trending in their social feeds.
But Sometimes, Tried-and-True Beats New and Trendy
Streamers in general are happy to watch programs that are over a decade old, largely because the content is just plain good. But nostalgia (64%) and tradition (49%) are also driving reasons for Gen Z. As one Gen Z streamer put it, “It makes me feel like a kid again, having a snow day, no school, and sitting on the floor watching my favorite cartoon. It feels good to relive some of these moments.”

Takeaways for Marketers

If Gen Z is what you’re after, but you don’t have time for a six-minute read, here’s the TL;DR of it:

By 2030, Gen Z is projected to account for 48% of spending worldwide. That’s a lot of skin serum and video games. (Kidding! Sort of.)
Gen Z spends more of their disposable income on personal nonessentials like travel, recreation, clothes, accessories, and technology than other generations (and is more likely to find themselves living paycheck to paycheck due to non-essential splurges).
When making purchase decisions, Gen Z cares about product quality, sustainability, brand authenticity, and shopping experience factors like availability of promotions, speed and cost of shipping, and return policies and procedures.
Gen Z spends 3x more time streaming content compared to watching cable or broadcast linear TV.
Young people are increasingly concerned about their streaming costs. Many are turning to low-cost and free AVOD services like Tubi to complement or replace more expensive options.
When Gen Z streams, they love to stream socially—whether in person, apart but connected via text, or in conversation with people on social media channels. What they watch is dictated by what’s trendy (the things their peer groups are watching) and what’s timeless (the older programming they loved as children).

So, how can brands effectively engage with Gen Z through their advertising strategies? If you haven’t already, start by sketching a profile of your best-fit Gen Z personas. Use those personas to figure out how and in what ways your brand values overlap with what your Gen Z audience cares about.

Use these findings as the basis of your marketing campaign messaging. Then, find creative ways (like influencer and content partnerships) to communicate and distribute the story of those values where your best-fit customers are already consuming content, like social and streaming channels. But whatever you do, don’t be performative, and don’t try to force authenticity; that would definitely be cringe.

To learn more about Gen Z’s streaming behaviors, download The Stream 2024: Streaming Insights for Marketers.

Tubi is the world’s most watched free streaming service, accounting for 2.1% of all TV viewing in the U.S. With nearly 81 million monthly active users, Tubi is a hub for young, multicultural viewers not easily reached on linear TV or on other streaming platforms. Learn more about our advertising solutions for cord-never audiences at https://www.foxadvertising.com/tubi/.

Meet the ‘Cord-Nevers.’